The business outlook of around 6 lakh medium, small and micro enterprises (MSMEs) in Karnataka looks bleak as interruptions in power supply by way of scheduled/unscheduled power cuts and load-shedding are only likely to continue as the state started at a drought situation with monsoon clearing failing this year.
According to trade body captains, one of the major concerns is MSMEs’ inability to deliver their commitments to their domestic as well as international customers in time and this is likely to lead to conflicts and long-term business losses. Constant supply of power is critical for manufacturing and power cuts are likely to adversely impact the state economy in general, as per them.
Yet to recover
“This year seems to be challenging for all businesses, more for MSMEs. Power interruptions are taking place at a time when the small businesses are yet to fully recover after the pandemic effects,” noted S. Devarajan, President, of Bangalore Chamber of Industry and Commerce (BCIC).
Frequent unscheduled power outages would certainly disturb the production plans of MSMEs, causing yield losses and even leading to conflicts with their customers. “The decline in production is the direct result in case of loss of power for smaller MSMEs. This will also lead to significant increase in cost of production,’‘ added Mr. Devarajan.
Echoing similar sentiments and expressing his concerns, Ramesh Chandra Lahoti, the newly elected President of the Federation of Karnataka Chambers of Commerce and Industry (FKCCI), said industries in the MSME sector were a worried lot today as monsoon failed in the state and constant power availability was a tough challenge.
The power cuts have impacted MSMEs in multiple ways. First, disruption in power supply will affect production and secondly, higher fuel charges (cost of running generators) and other cost adjustments burden would come on the MSME sector, Mr. Lahoti felt. To handle this scenario, trade bodies have already asked for subsidies on diesel for MSMEs on par with subsidies given to farmers to do agriculture.
Buy power
Karnataka Small Scale Industries Association (KASSIA) demanded that ESCOMs in the State should buy additional power at the earliest to keep the MSME sector running without power cuts.
“We KASSIA strongly demand and request ESCOMs to buy power at the earliest and support the industries on top priority. The loss to industries is also a loss of revenue for the government,’‘ said C.A. Shashidhara Shetty, President, KASSIA.
Coming down heavily on the administration, he said, “We feel the govt would have read the situation well in advance to protect the interest of the industry in particular and also to ensure that the state exchequer is not losing any revenues.” Even though there was a steep increase in tariff the MSMEs have accepted it, but uninterrupted power supply was critical for industries, he added.
Contingency plan a must
Businesses need to have a contingency plan to lessen the burden on main power grids. “It would be good if we focus on available alternate sources of energy like renewable energy (solar, wind) and the government promotes their usage removing the minimum threshold limit for procurement,” opined Mr. Devarajan.
